Overnight The Reserve Bank of New Zealand cut their interest rates by 50 basis points, bringing their rates down to 4.25%. Surprisingly the New Zealand Dollar rose by almost 1% off the back of this, mainly due to initial expectations of a 75-basis point cut. In the press conference afterwards, Governor Adrian Orr crucially left the door open for another 50-basis point cut in their next meeting, February 2025.
Elsewhere this week, we are still seeing Sterling hold its own against The Euro and this is down to a growth differential between The Eurozone and The UK. Current growth forecasts for The Eurozone are constantly revised lower compared to The UK due to fragile economic performance in The Bloc, as well as slowing inflation. On top of this, Donald Trump’s election victory is also weighing down on economic sentiment as potential trade tariffs would present another crucial blow to any possible recovery.
Elsewhere, developments throughout this morning on the ceasefire agreement deal between Israel and Hezbollah has led to some US Dollar weakness as the demand for a safe-haven asset decreases slightly. It’s believed that this ceasefire is due to be permanent, and that Hezbollah will have 60 days to remove all fighters and weapons, whilst Israel also gradually withdraws their remaining forces and civilians. Lebanese troops are expected to replace Hezbollah territory to allow the Lebanese government to re-establish control. Any further developments within this agreement and implementation could see some further movement on the markets in either direction as we have experienced over the past few weeks.
GBP/EUR 1.1968 GBP/USD 1.2600 GBP/AED 4.6300
GBP/AUD 1.9452 GBP/CHF 1.1121 GBP/CAD 1.7710
GBP/NZD 2.1410 EUR/USD 1.0516 GBP/ZAR 22.8680